Snellings v. Builders' Supply Co.
| Decision Date | 11 January 1934 |
| Docket Number | 155,154,157,158.,5 Div. 152 |
| Parties | SNELLINGS et al. v. BUILDERS' SUPPLY CO., and four other cases. [a1] |
| Court | Alabama Supreme Court |
Appeal from Circuit Court, Lee County; C. H. Vann, Judge.
Bills in equity to enforce a trust by the Builders' Supply Company against Christine Phillips, E. C. Smith, J. F Snellings, the Snellings Lumber Company, and Phenix-Girard Bank; by Builders' Supply Company against Harry Smith, E C. Smith, J. F. Snellings, Snellings Lumber Company, and Phenix-Girard Bank; and by E. C. Smith against Roy Chestnut J. F. Snellings, Snellings Lumber Company, and Phenix-Girard Bank. From the decree in the first case in favor of complainant and E. C. Smith, respondents Snellings and Phenix-Girard Bank appeal and complainant cross-appeals; from a like decree in the second case, the same respondents appeal and complainant cross-appeals; from a decree in the third case dismissing the bill, complainant appeals.
Corrected and affirmed in part, and reversed in part and remanded.
This record contains three separate and distinct suits in equity, and there are three separate appeals and cross-appeals, all by agreement consolidated in the one record, and dependent upon the same principles of law and evidence.
The transactions are the same as those considered by this court in a similar situation and reported in Builders' Supply Co. v. Smith, 222 Ala. 554, 133 So. 721; Builders' Supply Co. v. Phillips, 222 Ala. 556, 133 So. 723.
These are new suits begun after those were disposed of without prejudice. It is not necessary to repeat here what was there stated showing the nature of the transaction, except to note that the present suits do not seek to enforce a mechanic's lien.
The bills were filed by one whose rights grew out of a mechanic's lien, but the equitable principle on which they are founded is not to enforce that lien, but an equitable trust which was declared in the former appeal to exist in their favor on account of certain dealings which the respondents had by which a trust for the benefit of complainant as a materialman was created. In the former suits, the purpose was more directly to enforce a lien on an alleged balance due the contractor by the owner. Some of the counsel for appellants in argument seem now to treat the situation in that aspect. The bill does allege matters which show a mechanic's lien, but, forestalling a contention that the transaction between defendants operated as a payment of the balance of the contract price by the owner to the contractor, it now asserts the existence of a trust created by that transaction, rather than an assertion that it did not operate as a payment, but not conceding such contention. It adopts the holding by this court on the former appeal fixing the legal status of the transaction, and seeks to enforce it as there declared. This theory is sought by virtue of the allegations of paragraphs 9, 10, and 11 of the bill, and 14 of the amendment.
In respect to the liability of J. F. Snellings as trustee to account to complainant to the extent of its claim against the contractor, E. C. Smith, the chief question presented by this record affirming the equitable principles declared in the former appeal is whether or not the facts here shown are the same in legal effect as those found to exist on the former appeal. The bill here asserted those facts to exist. If they do, as shown by this record, the result is to create a trust in the hands of Snellings in which complainant was a beneficiary.
A matter of contention is whether Snellings procured a loan upon the mortgage of the owner from the bank to obtain funds with which to discharge the obligations of the owner to the contractor and materialmen in the erection of the house, and that this was done as agent of both the contractor and owner. If he procured the loan to or for the owner as there alleged, it was held that he was to that extent a trustee of the fund, which he thereby received.
There is some confusion in the evidence as to whether in fact Snellings did get the funds on a loan to the owner by the bank to which the mortgage was made, or whether he took an assignment by the bank of the mortgage, and held it as a basis of his own obligation to finance the owner and contractor to the extent that the mortgage itself created a trust in the hands of Snellings instead of on the money to be borrowed from the bank, if he did not get the money from the bank. If the mortgage was executed with the bank as mortgagee by agreement with Snellings that he would indorse it, secure the loan from the bank for the owner, use the money to finance the debt of the owner to the contractor, but, instead of doing so, he had the mortgage transferred to him by the bank, and he held it without disclosing to the parties just what arrangements he finally made, the owner and contractor could assume that the loan was secured and funds held in trust as contemplated; or if Snellings retained the mortgage and notes, and afterwards placed them in the bank for collection for his account, or as collateral for his personal obligation, the trust relation would exist as though he had obtained the money as contemplated. It would be in effect a loan by him of the funds to be held in trust for the uses contemplated.
Whatever may have occurred in connection with the bank, it is clear that he had the mortgage executed and delivered to him with the understanding that he would with it finance the owner to the extent of paying the balance due the contractor for the benefit of the materialmen, including Snellings Lumber Company, and as a consequence a trust was created in his hands to the extent of the amount of the mortgage, whether he obtained it from the bank or not.
While the evidence is uncertain and confusing, on this trial, as to what did exactly occur, it is clear that in either aspect a trust was created for the benefit of such materialmen, including complainant.
But there is no evidence that the bank was a party to the agreement that the proceeds of the loan should be thus applied.
This is not a controversy between the owner, as borrower on the mortgage, and the bank, because he did not get the benefit of the loan, or that it was not disposed of as directed; but with the agent of such owner and contractor, because he did not use it according to the terms of the agency. If the bank paid it to Snellings contrary to the instructions of the owner, this complainant is not in position to complain. It is not shown that the bank was under obligations to the owner or any one else to see that the money was used as agreed on between the owner, the contractor, and Snellings. It was not alleged or shown that the bank was a party to or knew of such agreement. So that on the case against the bank as made in the bill, and that most favorable to complainant, it does not show a liability by it to complainant. The bank seems to have been careless in presenting its defense and did not wake up until a decree was rendered against it. It then made a motion for a rehearing on a showing that it never made a loan on the mortgage to or for the owner, but transferred it without recourse to Snellings at his request, who later borrowed some money, not the amount of the mortgage debt, and transferred the mortgage as security, and that the bank held it as such collateral when payments were made on it by the owner as mortgagor. The court overruled the motion for rehearing, and the bank seeks to treat it not as a motion for rehearing, which is not appealable, but as in the nature of a supplemental bill. But we need not enter into a consideration of that question, because we think that the court was in error in rendering a judgment against the bank in the first instance, for the reason which we have stated.
We may however observe that a supplemental bill is for the purpose of bringing into the controversy matter which occurred after the original bill was filed, usually now after the rendition of the final decree. Patton v. Darden (Ala. Sup.) 148 So. 806; Bartee v. Matthews, 212 Ala. 667, 103 So. 874.
The original bill contained a footnote in proper form. An amendment was filed...
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